Korea’s top beauty chain CJ Olive Young puts IPO on hold

CJ Olive Young, South Korea’s top beauty store chain, has suspended its process to seek a stock market listing, becoming the latest major local company to drop its initial public offering plan on soured investor sentiment.

CJ Olive Young was expected to go public within this year with an expected corporate value of up to 4 trillion won ($3.1 billion). The chain was known to almost complete the work for the application for a preliminary review to the Korea Exchange but decided to temporarily cease the listing process, according to sources from the company and the investment banking industry.

“We have suspended the listing process, considering it is currently difficult to be properly valued,” said a CJ Olive Young official. “We plan to resume it at an appropriate time.”

Last month, Hyundai Oilbank Co., a South Korean refiner backed by Saudi Aramco, withdrew its IPO plan as stock markets tumbled due to rising interest rates amid surging inflation and fears over a global recession.

The bearish sentiment forced South Korean unicorns, startups whose valuations top $1 billion, such as Viva Republica Inc., the operator of fintech platform Toss, to postpone their listings until next year. The country’s top online fashion platform Musinsa Co. and No. 1 travel and accommodation platform Yanolja Co. joined the move.

FOR SUCCESSION

CJ Group owner’s family reportedly aimed to raise money for succession through CJ Olive Young’s planned IPO, according to the investment banking industry sources.

The group’s heir apparent Lee Sun-ho is the No. 3 shareholder of CJ Olive Young with an 11.04% stake, while his sister Lee Kyung-hoo holds 4.21%. Its top shareholder is CJ Corp., which controls 51.15%, followed by Glenwood PE with 22.56%.

Last year, Lee Sun-ho and Lee Kyung-hoo secured some 100 billion won and 39 billion won, respectively, by selling some of their stakes to Glenwood. The children of CJ Group Chairman Lee Jae-hyun used the proceeds to pay gift taxes and buy CJ preferred stock in a move for group succession.

They were known to be looking to secure the necessary funds for succession through the CJ Olive Young IPO, according to the source. But they do not need to push ahead with the listing at lower values since such conglomerates have other ways to raise money, the sources said.

“Major companies often consider other issues such as group image and affiliate symbolism, as a listing is not the only mean of fundraising,” said an investment banking industry source. “CJ will continue the succession process throughout the group.”

Write to Seok-Cheol Choi at dolsoi@hankyung.com
Jongwoo Cheon edited this article.